Reports coming from Adidas’ “Hauptversammlung” (AGM) indicate that the company may now have a solution for the surfeit of Yeezy inventory it finds itself left with after terminating its partnership with rapper and fashion designer Ye (formerly known as Kanye West).
As reported in its Q1 call last week, if the company opts not to sell the Yeezy products, it faces a revenue loss of approximately €1.2 billion and a negative operating income impact of €500 million this year. The discontinuation of the Yeezy business hurt Q1 sales by approximately €400 million.
CEO Bjørn Gulden told analysts then that Adidas was “getting closer and closer to making a decision” on what to do with the unsold Yeezys, suggesting the group’s options for the product were narrowing.
Today Gulden declared: “Burning the goods is not the solution.” Instead, as has been widely reported, the proposed solution emerging from the AGM is to sell the goods and donate the profits to organizations representing the interests of those Ye has harmed with his anti-semitic comments.
However the exact details – including whether West would receive any commission and when and how any sales of inventory would take place – have not been decided, with Gulden only quoted as saying, “We are working on these things.”
Meanwhile, Adidas is still facing a shareholder lawsuit in the US for not acting fast enough during its partnership with Ye. The class action suit, filed in US federal court in Oregon on April 28, names Adidas AG, the company’s former CEO Kasper Rorsted, and current CFO Harm Ohlmeyer as defendants. The 26-page complaint, filed on behalf of Adidas investor HRSA-ILA Funds and other shareholders, accuses the company of ignoring Ye’s “extreme behavior” over a nearly five-year period and failing to call out risks to its partnership with the musician and fashion designer in four consecutive annual reports starting in 2018.
Gulden appeared to address this too, defending Adidas’ years of collaboration with the rapper. He is quoted in German media including Zeit Online as saying, “As difficult as he was, he is perhaps the most creative mind in our industry,” adding however, that it was also the right decision to part with him.
Photo by Kyle Brinker on Unsplash
